A great home for great companies An introduction to Patricia Industries Contents 4 About us 6 Ownership & governance 8 Business model 10 Milestones 12 About our companies Aleris BraunAbility LABORIE Mölnlycke Health Care Permobil The Grand Group Vectura 3 Scandinavia Financial Investments 28 Our team 2 We build companies for the long term At Patricia Industries, we are building a group of companies with services, takes time. Therefore, we do not want to be limited by long-term growth potential. Our job is to be a committed owner a timeframe, and consequently, our ownership horizon is helping great companies realize their full potential. forever. Exits are not a part of our strategy – we plan to keep our companies indefinitely. That said, we also need to be relentless The Wallenberg sphere today centers around ten non-profit in managing near-term performance – the long-term consists of foundations – the Wallenberg Foundations – and two industrial many short-terms. holding companies – Investor AB and FAM – that hold significant ownership interest in some of Scandinavia’s largest and most Our companies are diverse and therefore face very different important blue chip corporations including ABB, AstraZeneca, challenges. Accordingly, our working model is based on treating Atlas Copco, Electrolux, Ericsson, Husqvarna, Saab AB, SAS, SEB, each company individually and independently. We base our SKF, Sobi, Stora Enso and Wärtsilä as well as US based Nasdaq. ownership philosophy on the Swedish model of corporate governance – which means that, as owners, we focus on Patricia Industries is responsible for the wholly-owned, private appointing the right board for each company. Our boards are subsidiaries of Investor AB. Since 2006, the focus on wholly- typically composed of independent directors from our industrial owned companies has increased significantly. Patricia network, led by a non-executive chairperson. As owners, Industries was established in 2015 to accelerate and increase we rely on the boards and management to execute on our the commitment to that effort. The focus is to own both Nordic longer-term strategic ambitions. and North American companies; the Nordics is our home market and we have been active in North America for decades Today, we both aspire to be the best possible owner of the very interesting companies we already own as well as to find great Our fundamental belief is that developing companies, whether new companies to add to the Patricia Industries portfolio. by penetrating new markets or investing in new products or Christian Cederholm Noah Walley Co-Head, Patricia Industries Co-Head, Patricia Industries “What we do in Patricia Industries is really a continuation of what the Wallenberg family has been doing ever since André Oscar Wallenberg founded Stockholm’s Enskilda Bank in Sweden in 1856 – namely actively supporting the development of great companies globally.” – Marcus Wallenberg, Chairman of the board 3 Striving to be a great home for great companies Patricia Industries is a long-term owner that invests in companies and works to develop each company to its full potential. We were founded in Sweden by the Wallenberg family and we are owned by the family’s industrial holding company, Investor AB. OUR BUSINESS CONCEPT OUR VISION Patricia Industries develops companies – in the Nordics Our vision is to be a great home for great companies. and North America – with strong customer relationships, brands and organizations. This is a never-ending strive for continuous improvements for us as well as for our companies. We focus on industries with long-term growth potential where our experience, knowledge and network give us an edge. When we say a great home for great companies, we mean that we We are the only owner in our companies and hence the sole want to be a force for long-term value creation for our companies, source of owner direction and expectation-setting vis-à-vis our including investments in organic and non-organic growth, subsidiaries. We enjoy the full impact of our ownership in our development of strategies that generate sustainable profitability companies, but we also have full responsibility. for years to come, investments in innovation and sustainability in our subsidiaries’ markets and communities, regardless of As owners, we rely on strong and independent boards to ensure pressure from market or other external forces. that we are building strong and healthy companies for the long term, while simultaneously creating the necessary urgency OUR CORE PRINCIPLES around the short-term performance. We provide co-ownership We have a long-term perspective but are impatient in terms to our boards and management teams to ensure alignment and of driving improvement. Long-term perspective cannot be a true partnership with us. an excuse for lack of short-term performance. Innovation and constant renewal are at the core of our Our main priority is to be a great owner of our existing ownership model. companies, but we also look for new companies to acquire. We focus on having the right person in the right place at the right time. We maintain financial discipline, ensuring that our companies have the funds they need to pursue long-term attractive opportunities for profitable growth. 4 >20,000 employees in our companies in figures USD 200-700 m. in typical equity investment Preferred holding horizon: ∞ Patricia Industries Palo Alto office New York office Stockholm office 5 The Wallenberg family has a history of developing companies that spans more than 150 years The Wallenberg Foundations, the largest owner in Investor AB, is the leading private donor of funds to Swedish research and science, second only to the Swedish government. Grants to research and science have averaged approximately SEK 2 bn. annually over the past few years. 6 THE WALLENBERG FAMILY well as in many of the holdings. Marcus and Jacob Wallenberg The Wallenberg family has actively worked to support both serve on the board of Patricia Industries. enterprise and science in Sweden since the mid 1850’s. It all began with Stockholm’s Enskilda Bank in 1856, established by OWNERSHIP André Oscar Wallenberg. In 1916, Investor AB was created to Patricia Industries is a part of Investor AB, Northern Europe’s manage and own the industrial holdings of the bank. Since largest industrial holding company, which is publically listed on then, Investor AB has evolved into a long-term, active owner Nasdaq Stockholm. of best-in-class companies. The Wallenberg foundations are the main owners of Investor AB, The family, through the fifth generation, is still very active in the controlling 50 percent of the votes. Wallenberg Foundations, Investor AB and Patricia Industries as Ownership & governance WALLENBERG FOUNDATIONS INVESTOR AB BOARD OF PATRICIA Listed Core EQT INDUSTRIES Investments PATRICIA INDUSTRIES Wholly-owned subsidiaries Partner-owned companies Financial Investments 7 Focusing on the long-term, because building great companies takes time We own Nordic and North American companies in industries that we know well, and where we have a relevant network of key people who can contribute their expertise. These industries include healthcare, engineering, financial services and technology. We look for long-term growth as well as market and thought leadership in defined niches. 8 Our goal is to help our companies maintain or achieve best- members with solid industrial expertise, financial knowledge in-class positions in their respective industries and our team and experience leading international operations. This network works actively with the boards and management teams of also includes former politicians and representatives of the our companies to achieve organic and non-organic growth. academic world. Our goal is to create diverse and dynamic We strive to build and develop strong companies that generate boards with members that have relevant competences and sustainable profitability for years to come. who have the time to be actively engaged; this is at the center of our ownership model. We constantly scout the market for new companies, but the main priority is to be a great owner of our existing companies, We define and constantly refine value creation plans for each in line with our endless ownership philosophy. company, focusing on key strategic initiatives aimed at creating value over the next three to five years. While our ownership We typically contribute USD 200-700 m. in equity and use modest horizon is long term, we believe in putting shorter-term plans leverage, around 3-4x EBITDA. We aim to exceed 90 percent in place to create a clear focus on execution. ownership, with management as co-owners. FINDING THE RIGHT PEOPLE STRIVING FOR BEST-IN-CLASS Great companies are built by great people. It is our firm belief We believe in benchmarking against the very best competitors that leadership and individuals make all the difference. This is and other relevant companies as a basis for identifying why much of our work is focused on ensuring that the best improvement potential for our companies in terms of growth, possible people are appointed to the boards and management profitability, efficiency and quality, as well as customer and teams of our companies. A strong company culture is a key employee satisfaction. asset in all our companies. To become or remain best-in-class, companies must have the IMPROVING SUSTAINABILITY ability to invest in innovation, regardless of pressure from the We believe in the strong link between sustainability and market or other external forces. Through our financial strength, long-term profitability and that companies who act in a socially, we allow our companies to make the right investment decisions ethically and environmentally responsible way will outperform – at the right time. Access to capital, in combination with sound the competition over time. We encourage our companies to be ownership and governance, creates opportunities to invest for positive and responsible forces in their markets and communities.